Tennessee’s tax system is regressive, requiring low- and middle-income families to pay more of their income in tax than wealthier Tennesseans. A tax reform plan recently proposed by the Tennessee Tax Structure Study Commission would reduce the state sales tax, repeal local sales taxes, cut business taxes, and introduce a personal income tax. This analysis looks at the fairness of the current Tennessee tax system and estimates the impact of the Commission’s proposed reforms on the regressivity of the tax system.
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